Features & Benefits of Liability Insurance
Here are some of the features and benefits of this policy:
- Financial coverage to individuals and companies
- Protection against property damage
- Third-party bodily injury coverage
- Third-party legal liabilities
- This insurance is often required for product manufacturers, automotive insurance policies or whoever practices law or medicine.
- Intentional damages, criminal prosecution and contractual liabilities are not covered.
- Commercial liability, personal liability or workers’ compensation are different types of liability insurance.
Liability Insurance: Inclusions
The policy provides coverage for the following:
- Financial expenses incurred due to lawsuits filed against the insured
- Expenses incurred during investigations and settlements
- Financial coverage for the fees of investigating officer or hired lawyer after being sued by a third party
- Medical expenses incurred after an accident on the insured person’s premises that led to a third-party claim
- Medical expenses incurred after an accident from any of the insured person’s products or during official operations
- Any loss or damage caused to the third party's property while visiting the office of the insured person
Liability Insurance: Exclusions
The insurance policy does not provide coverage for the expenses arising out of the perils:
- Willful misconduct and intentional damages
- Any damage or loss caused due to natural calamities such as volcanic eruption, earth-tremor, typhoons, floods, storms or tornados
- Loss in the market and loss of goodwill
- Libel and slander
- Expenses coming out of Wrongful eviction, defamation and false arrest
- Infringement of patents, copyright, trademark, trade name, etc.
- Fines and penalties
- Transportation of dangerous substances and materials unless opted for a separate kind of coverage
- Loss or damage caused due to war, nuclear war
Types of Liability Insurance in India
There are different types of policies that are available in India. Some of the most common liability policies are:
Public liability insurance is designed for those industries/companies that have frequent interaction with the general public. Insurers suggest buying this insurance policy to secure yourself from unnecessary financial risks and legal liabilities. Retail shops, shopping malls, clubs, theatres, and all those catering to the general public are advised to take this variant of liability policy.
PI insurance or professional liability insurance is a type of liability policy. It is designed for professionals such as medical practitioners, architects, engineers, lawyers and chartered accountants. The policy provides coverage to these professionals to protect their business interests against legal claims arising out of professional negligence, error, or omissions.
Directors and officers liability insurance is the type of policy that provides coverage to the directors and officers of big organisations. It provides coverage in case of any legal cost arises against them due to the following reasons:
- Unlawful acts
- Releasing confidential information
- Conflict of interest
- Failure to maintain the property
- Gross negligence
Errors and Omission insurance is a type of liability insurance that provides coverage against lawsuits that can arise out of negligent professional service as well as failure to perform professional duty. This insurance policy is mostly purchased by lawyers, engineers, architects or any other business that provides any kind of service to a client.
This policy is for employers who want to cover the liabilities of employees who may get injured because of the job. Generally, this insurance policy is known as Business Liability Insurance.
This policy is one of the most required policies by companies that are related to the production of tobacco, the chemical industry, food, medical products, recreational products, etc.
Third-Party Liability
This policy is suitable for small industries or individuals who want coverage against damages or losses caused by them to a third party. In third-party insurance, the insured is the first party, the insurance provider is the second party and the company/person who sustained loss or damage and raised a claim against the insured is referred to as a third party.
Who should Buy Liability Insurance?
The policy is designed for companies or individuals who are held legally liable for injuries or other issues. This type of insurance policy is most suitable for doctors, hospitals, business owners, etc.
For example, if a product manufacturing company sells a product that causes loss or damage to the consumer who used that product then the consumer can sue the manufacturing company. However, if this manufacturing company is procuring a liability cover plan, then the loss or legal costs will be covered by the insurer.
Liability insurance is covered under general insurance policies. The scope of liability insurance in India is defined by the Public Liability Act of 1991.
How is the Liability Insurance Premium Decided?
The insurance company considers different factors before deciding the premium amount for a liability insurance policy taken by an individual or a company. The first and foremost factor that affects the premium of a policy is the amount of risk a product of a company can cause. The higher the risk, the higher the premium amount will be.
Other factors that are considered by an insurance company include:
- The claim history of the insured
- The approach of the company toward the risk
- The business record of the company
How to Raise a Claim Under Liability Insurance?
Follow the steps below to raise a claim under liability insurance:
- Intimate the insurance provider over a call or email or by visiting the nearest branch office
- In case of theft or death, it is recommended to report at the nearest police station or the concerned authorities. This report will be required by the insurance company in addition to the claim form and the documents
- In some cases, evidence is also required
- The insurer will appoint a supervisor to examine the site of the incident or the damage caused to create a report and decide the compensation accordingly
- The insurer will update the claim status or one can check the claim status online
How to Renew Liability Insurance Policy?
Follow the steps given below to renew the liability insurance policy online:
Step 1: Access your insurance account using your policy number.
Step 2: Once you enter the account, review the insurance plan.
Step 3: You can add or remove any add-on if you want.
Step 4: The addition and removal of any add-on to the policy will reflect in the final premium amount of the policy.
Step 5: Now you can make the payment using your debit or credit cards, UPI, or net banking.
Step 6: Once you make the payment, the insurer will send the updated policy documents to your registered email ID and a hard copy to your registered home address.
*Make sure to renew your liability insurance policy on time to avoid lapsing.
Why should You Buy Liability Insurance?
Liability insurance policies cover the insured against any claims arising out of bodily injuries and damages to the property of any person. Besides covering the legal costs involved, liability insurance provides coverage for payouts that the insured is legally liable to pay.
Business owners, industrial and non-industrial operators, product manufacturers, cab owners, hotels and doctors, can be saved from being sued. In case the compensation and legal settlement are done for loss/damages/injuries caused to a third party or person. A liability insurance policy can also be purchased to protect employees from risks arising during business operations.
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